At some point, every continuous improvement program runs into the same conversation. A senior leader -- usually the CFO, sometimes the CEO, sometimes both -- wants to know what the organization is actually getting for the investment. The CI leader has stories, has anecdotes, has a wall of post-it notes. What they don't always have is a defensible number.
This session is the working manual for that conversation. Jeff Roussel hosts, and the back-and-forth between Greg Jacobson and Mark Graban moves through six categories of return on investment with both benchmark data drawn from across the KaiNexus customer base and explicit advice on how to talk about each one with senior leadership without losing credibility.
The structure is straightforward: hard cost savings, soft savings, revenue, safety, satisfaction, and quality. Each gets a definition, a representative story, the aggregated data across the platform, and a discussion of what to claim versus what to be careful about. The thread running through all six is a warning that shows up repeatedly: don't overreach. Don't claim soft savings as hard savings. Don't be the program that adds up to half a million dollars per project on paper while the organization remains no more profitable than it was a year ago. That program loses credibility, and once credibility is gone, the program goes with it.
What makes the session especially useful is the section on home-run improvements. The counterintuitive finding from the data -- that the easiest way to generate a $30,000 idea is to look for $10 ideas -- has implications well beyond the metrics conversation. It changes how CI leaders should think about engagement, about what to ask staff for, and about what kind of language to use when asking. That insight gets its own treatment further down.
Dr. Gregory Jacobson is CEO and co-founder of KaiNexus. An emergency medicine physician, he founded KaiNexus during his residency at Vanderbilt University after recognizing the need for a scalable way to spread continuous improvement across healthcare systems. He leads product development and strategy at KaiNexus.
Mark Graban was then VP of Customer Success at KaiNexus. He is the author of "Lean Hospitals," a Shingo Research Award recipient, and co-author with Joseph E. Swartz of "Healthcare Kaizen" and "The Executive Guide to Healthcare Kaizen." He works with healthcare and other organizations on Lean leadership, psychological safety, and continuous improvement culture.
Jeff Roussel was then VP of Sales at KaiNexus and hosted the session.
Mark opened with the textbook definition. Return on investment is the financial benefit produced above the financial cost of the investment, often expressed as a percentage. Spend a hundred dollars, gain a hundred and twenty, and the twenty is the return.
That definition is correct and incomplete. Greg pushed against the narrow framing immediately. The technically correct dictionary definition is also the definition that traps most CI programs into measuring only what's easy to count, missing most of what makes the work valuable. His working definition is simpler: ROI is the benefit. Period. What is the benefit of doing continuous improvement, and how do you communicate that benefit clearly enough that the program spreads?
Jeff added the practical operating point from his sales conversations. ROI is not always expressed in dollars. Sometimes the most accurate framing is time -- the payback period. A continuous improvement effort might recoup its investment in three months. That's a real ROI even if no one ever calculates the dollar value of those three months. And Mark added the deeper point: focusing too much on ROI calculations holds organizations back. If a program demands a calculated ROI for every individual improvement before approving it, the small improvements that compound into the big ones never get tried. The cost of not engaging people in lots of small improvements is invisible on a spreadsheet and enormous in practice.
That tension -- between needing real numbers to defend the program and needing to avoid being so number-focused that the program suffocates -- runs through the rest of the session.
Hard cost savings are the dollars that show up on actual financial statements. Reduced overtime. Lower supply costs. Less waste. If you can point to a line item in the budget that is genuinely smaller because of an improvement, that's a hard savings.
Across the KaiNexus customer base at the time of the recording, 826 improvements had been documented as producing direct hard cost savings, totaling about $25 million. That works out to roughly $30,000 per improvement on average -- a number Mark flagged as high, with a useful caveat. The 826 number is almost certainly not the total count of improvements that affected cost. It's the count of improvements where someone took the time to calculate, document, and add up the savings.
For improvements saving $20 or $50, that math isn't worth doing. The improvement happens, the cost goes down marginally, and nobody stops to log it formally because the calculation would take longer than the savings justify. The 826 are the ones where the savings were big enough that someone bothered.
Greg's rule of thumb on this is practical and worth stealing. Set a threshold. Below the threshold -- say $1,000 -- don't burden front-line staff with detailed cost calculations. Let them keep doing improvement work. Above the threshold, get Finance involved in validating the numbers. Above a higher threshold -- say $10,000 -- the involvement should be mandatory, not optional. Finance departments don't want to validate $47 savings. They will want to validate $47,000 savings, and their involvement is what makes the resulting numbers defensible to the C-suite.
The healthcare story Greg used was tactically useful. A nurse noticed that every time the leg compression devices used to prevent blood clots were applied, staff were removing the thigh component because it was uncomfortable and difficult to put on. A root cause investigation traced it back to a simple order-form miscommunication. The medical evidence showed compression at any location works -- it's the compression itself that prevents the clot, not the specific location. The order form got corrected. One observation, one hospital, $65,000 in annual savings, with the change being spread to other hospitals in the system.
Mark's non-healthcare example matched the pattern. A customer's drivers didn't know which gas stations the company had negotiated fuel discounts at. A single observation surfaced the problem, a communication went out identifying the contracted stations, and the change produced $100,000 per month in bottom-line impact -- because the savings multiplied across the fleet.
The pattern across both: small observations from people doing the work, traced to a real change, with savings calculated carefully and validated by Finance when the numbers got big enough to matter.
This was the counterintuitive headline of the session, and it deserves to be pulled out as its own argument.
When organizations ask employees to come up with big, needle-moving improvements, employees freeze. The pressure to produce a million-dollar idea is intimidating. People don't have million-dollar ideas sitting in their heads ready to be deployed. They have small observations about their work -- the kind of thing they notice in the moment but don't think is worth raising.
When organizations ask employees to come up with small, low-cost, low-risk improvements -- get a base hit, get on base -- the volume picks up dramatically. And inside that volume, the data shows something specific. About 1.4 percent of submitted improvements turn out to be home runs. About 2.5 percent generate over $10,000 in impact. The home runs aren't the ones that looked big when they were submitted. They're the ones that turned out to be big, often because the same small change could be replicated across many departments or facilities.
Greg quoted a Japanese hospital CEO he'd talked to: the best way to find a big idea is to go looking for lots and lots of little ideas. Mark added the baseball metaphor: if you coach a team to only swing for home runs, you don't end up with more home runs. You end up with fewer runners on base and fewer runs scored.
The operational implication for CI leaders is concrete. Stop asking for transformational ideas. Start asking for small observations. Make the bar to submit low enough that the volume is high. The home runs will emerge from the volume. They will not emerge from a culture that filters every submission against "is this big enough to matter."
This is the same insight that shows up in the Markovitz session's two-second Lean framing, and in Joe Swartz's "start small" fundamental. The data here is what makes the case quantifiable.
Soft savings are the dollars that don't quite show up on the financial statements but exist in some form. Time saved. Effort avoided. Steps eliminated. Mark referenced an IHI white paper that distinguished between "dark green dollars" (hard, finance-validated savings) and "light green dollars" (soft savings, the kind Finance will frown at).
At the time of the recording, 1,495 improvements in the system had been documented as saving time, with over 400,000 hours of time saved across the customer base. For customers who chose to attach a dollar value to staff time, that totaled around $11.8 million. The data is almost certainly an underestimate, because some customers don't attach dollar values to time savings at all.
The example Greg used was the visual acuity workflow in an ER. A junior doctor noticed that every patient needed their visual acuity documented as part of the eye exam, which meant the doctor ordered the test, walked out, found a tech, the tech did the test, and the result came back -- often multiple minutes per patient. The redesign was simple: a station next to the triage walk path where every patient stopped briefly to read the eye chart on the way to their room. By the time the doctor saw the patient, the result was already in the chart.
Time saved for the tech. Time saved for the doctor. Time saved for the patient. None of that flowed cleanly to the bottom line on its own. But Mark's framing here was important: time savings becomes hard savings when it flows through to something measurable. Reduced overtime is hard savings. The ability to see more patients per appointment slot is hard savings. The simple existence of time saved, without a downstream financial effect, is not.
Mark's warning on soft savings was the most pointed in the session, and it's worth quoting closely. Some CI programs -- in Lean or Six Sigma settings -- claim half a million or a million dollars in savings per project. Add up those claims, and the savings should be transformative. A year later, the organization is no more profitable than it was. The claims were never real. They were calculated in spreadsheets, signed off internally, and never validated against actual financial outcomes. That's "funny money," and once the C-suite figures out it's not real, the program loses credibility permanently. Finance rolls their eyes. The CEO stops believing the numbers. The next budget cycle, the program gets cut.
The discipline is to claim soft savings as soft savings, with no pretense that they're hard. When they flow through to something Finance can validate, claim them as hard. When they don't, claim the time saved on its own terms -- as time that can be redeployed, as patient experience improved, as staff burden reduced -- without dressing it up.
Revenue gains rarely come from improvements designed to increase revenue. They come from improvements designed to do something else -- improve patient experience, reduce wait time, eliminate a step -- and the revenue follows as a downstream effect.
Greg's revenue example was a nurse in a subspecialty clinic who noticed that patients were being handed paper prescriptions to fill at outside pharmacies. The change was small: call the prescription in to the hospital pharmacy instead, so it was ready when the patient walked out. The nurse almost certainly wasn't thinking about revenue. They were thinking about the patient experience.
The financial effect was substantial. One specialty clinic, with expensive medications routinely prescribed, generated about $200,000 in additional pharmacy revenue from the change. Spread across all the subspecialty clinics, the estimated revenue increase exceeded $2 million.
The data across the platform showed 254 improvements explicitly tagged as increasing revenue, with an estimated $19 million in topline impact. As a ratio across the platform, about 1 in 30 improvements produced a revenue increase -- compared to about 1 in 10 producing a cost savings. The numbers are smaller because revenue-generating improvements are rarer, but the dollar amounts per improvement tend to be larger.
Mark's point on this was structural. Most organizations don't ask staff to generate revenue ideas. They ask staff to take care of patients well, to eliminate friction, to reduce non-value-added time. When that work succeeds, capacity increases. With more capacity, the organization sees more patients, more appointments, fewer ambulance diversions in an ER context, fewer patients leaving without being seen. The revenue gain is the second-order effect of the operational improvement, not the goal of it.
This matters for how CI leaders frame the program internally. A program pitched as "we'll help you grow revenue" raises expectations that are hard to meet directly. A program pitched as "we'll help your staff do better work, and one of the things that produces is revenue capacity you didn't have before" sets the right expectation and tends to overdeliver on the financial side rather than underdeliver.
Safety was the bucket where Mark made the strongest argument that financial framing can actively cheapen the conversation. Paul O'Neill, the former CEO of Alcoa, made the case that workplace safety is a moral issue first. Nobody should get hurt coming to work. That's the principle, and the financial case is a downstream consequence, not a justification.
For healthcare, the parallel is patient safety. Far too many people are harmed or die from preventable medical errors. The moral case stands on its own. The financial case also exists -- reduced malpractice insurance rates, fewer reimbursement penalties, lower turnover from injured staff, fewer lost workdays -- but leading with the financial argument tends to backfire. Staff are more motivated by safety as a mission than by safety as a cost-saving lever, and the engagement that comes from the mission framing produces more safety improvements than the engagement that comes from the financial framing.
At the time of the recording, 871 improvements in the platform had been tagged as safety improvements -- another 1-in-10 ratio against the total improvement count. Virginia Mason Medical Center in Seattle was the example Mark used for the financial side: their malpractice insurance rates dropped dramatically as patient safety improved.
The framing he settled on was win-win-win. Safety improvements are the right thing to do. They engage staff more deeply than cost-cutting initiatives. And the financial benefits emerge as a consequence rather than as the motivation. That's a different argument than "we should improve safety because it saves money," and the difference matters culturally.
Satisfaction was treated as two related categories: customer/patient satisfaction and employee satisfaction. Both produce downstream financial effects that are real but hard to isolate.
Happier customers return more often. Happier employees stay longer. Mark's specific example came from a CEO he and Joe Swartz had interviewed for "Healthcare Kaizen" who told them the only ROI he tracked from the Kaizen program was the reduction in employee turnover. The reasoning was clean: turnover is easy to measure, the cost of recruiting and training new staff is concrete, and cutting turnover from 20 percent to 10 percent has a direct, measurable bottom-line effect. Every other benefit was real but harder to attribute.
In the U.S. healthcare system, patient satisfaction scores (HCAHPS) directly flow into hospital reimbursement bonuses. That makes patient satisfaction not just a moral or experiential outcome but a financial line item, with a defined relationship to revenue.
The platform data at the time showed about 3,400 improvements tagged with a satisfaction component -- roughly 40 percent of all improvements. The high ratio reflects something specific: when employees are engaged in improving their work, they naturally gravitate toward improvements that make the workplace better for themselves and their customers. The satisfaction effect is broadly distributed rather than concentrated in a few projects.
Greg's definition of quality is the simplest he could make it: quality is how well the product or service you deliver meets the customer's actual need. The more alignment between what you produce and what they need, the higher the quality.
Across the platform, over 3,400 improvements had been tagged as quality improvements -- another roughly 40 percent of the total. The financial effect of quality is harder to isolate than cost savings or revenue gains, but it's also more fundamental. Without high quality, the organization eventually loses customers, market position, and the operating runway to do anything else.
The framing question Greg ended on for this section was the one that should anchor the whole conversation: do you want just a few people in your organization thinking about how to improve quality, or do you want everyone in the organization thinking about it? Most leaders, when asked that way, immediately recognize the answer. Quality is too broad and too embedded in daily work to be the responsibility of a quality department. It has to be the responsibility of every person doing the work. That's not just a philosophical claim. It's the only way the volume of small quality improvements becomes high enough to matter.
Pulling all six buckets together, the platform at the time had documented about 8,000 improvements with a total impact of approximately $56 million.
Simple division gives about $7,000 per improvement. Greg rounded that down to $5,000 deliberately, applying Mark's discipline of being conservative. The benchmark he recommended CI leaders take to their senior leadership is "every person engaged in continuous improvement produces about $5,000 in annual impact to the organization." That number is conservative enough to be defensible, simple enough to communicate, and big enough to make a real case for investment.
A clarification surfaced in the Q&A: the $56 million number is a mix of annualized and one-time savings, deliberately counted conservatively. An improvement that saves $10,000 per year is counted as $10,000 once in the platform total. That structural conservatism is why the number is defensible.
The math the C-suite cares about works out to roughly this: for an organization with 1,000 staff, broadly engaging them in continuous improvement should produce on the order of $5 million in annual impact. For 10,000 staff, $50 million. The numbers scale linearly with engagement, which is the point -- the limiting factor is how many people are actually participating, not how brilliant the program design is.
Greg closed the session with four points worth keeping. They're the operating guide for the conversation every CI leader has to have eventually.
First, come with numbers. If you don't have your own organization's numbers yet, use the platform benchmarks. The $5,000-per-engaged-person figure is defensible, conservative, and grounded in aggregate data across thousands of organizations.
Second, articulate the numbers simply. Don't bury the lede in caveats. The opening sentence is the benchmark. The detail comes after, when the executive asks for it.
Third, recognize that there's almost always improvement work already happening in the organization, scattered across projects, value stream mapping events, Kaizen events, and local idea boards. The CI leader's job is to make the total impact visible -- to aggregate it across all the pockets where it lives. Without aggregation, every individual effort looks small. With aggregation, the cumulative impact becomes a real number that justifies real investment.
Fourth, and most important: tie the conversation to what the senior leadership is already talking about strategically. If they're focused on length of stay, talk about how engaged front-line improvement work supports length of stay. If they're focused on safety, talk about safety. CI is the most versatile tool the organization has. It can be pointed at any strategic priority. The CI leader's job is to point it at the priority the executive cares about, not at the priority that's easiest to explain.
Mark's closing addition was the discipline of conservatism. Underclaim. Overdeliver. CI programs that overclaim become funny money and lose credibility. CI programs that underclaim and then beat their numbers build trust year over year. The first kind of program eventually gets cut. The second kind eventually becomes the management system.
The aggregated data this session is built on -- the 8,000 improvements, the $56 million in documented impact, the 1-in-10 cost savings ratio, the 1-in-30 revenue ratio, the 40 percent quality and satisfaction tagging rates -- exists only because the underlying platform asks every user to think about impact at the moment of completing an improvement. Without that structural prompt, most of those impact numbers would never get captured. The improvements would happen and the savings would be real, but no one would ever add them up.
The threshold notifications Greg mentioned for Finance involvement are the operational mechanism that turns staff-reported savings into Finance-validated savings. When an improvement crosses the customer-defined dollar threshold, Finance gets notified automatically and can review the calculation. That's what keeps the aggregated number defensible rather than aspirational.
The aggregation across departments, sites, and even years is the other piece. The reason small improvements compound into the home-run impact figures Greg described is that the same change spread across a hundred locations becomes a different magnitude of result. Tracking that spread -- which improvements were replicated where, what additional impact each replication produced -- requires infrastructure beyond what a spreadsheet can sustain.
None of this changes the central message of the session. CI ROI is real, it's substantial, and it's defensible if you talk about it conservatively and tie it to what leadership cares about. What infrastructure does is keep the numbers honest and the aggregation continuous, so the conversation with the C-suite is grounded in data rather than estimates.
What does "ROI of continuous improvement" actually mean? In the strictest financial sense, return on investment is the financial benefit produced above the financial cost of the investment, expressed as a dollar amount or percentage. In a CI context, the more useful working definition is broader: the total benefit produced by the improvement work, including hard cost savings, soft savings, revenue gains, safety improvements, satisfaction improvements, and quality improvements. Some of these are easier to count than others, but all of them are real.
What's the difference between hard savings and soft savings? Hard savings show up on the financial statements. Reduced overtime, lower supply costs, eliminated waste -- dollars that are genuinely no longer being spent. Soft savings exist but don't flow cleanly to the bottom line. Time saved, steps eliminated, friction removed. Soft savings can become hard savings if they flow through to something Finance can validate -- for example, time savings that reduce overtime, or capacity gains that allow seeing more patients per appointment slot. The discipline is to claim hard as hard and soft as soft, without dressing one up as the other.
What's the average financial impact of an improvement? Across the aggregated KaiNexus customer base at the time of this webinar, about 8,000 improvements had been documented with approximately $56 million in total impact -- around $7,000 per improvement on average, conservatively rounded to $5,000 to allow for variance and to leave room to overdeliver. About 1 in 10 improvements produces a direct cost savings, and about 1 in 30 produces a revenue increase. The numbers are imperfect by design -- many improvements have impact but never get formally calculated because the savings aren't large enough to justify the calculation effort.
Why is the easiest way to find a $30,000 idea to look for $10 ideas? Because home-run improvements emerge from volume, not from intent. About 1.4 percent of submitted improvements turn out to generate home-run-level impact, often because a small change in one department turns out to be replicable across many departments. Asking employees for big, transformational ideas tends to freeze them -- the pressure to produce a million-dollar idea is intimidating, and most people don't have one ready. Asking for small, low-cost, low-risk improvements unlocks the volume that produces the home runs as a downstream effect.
Should every improvement have its savings calculated and documented? No. The threshold rule is practical: below some dollar amount (often around $1,000), the calculation effort costs more than the precision gained. Let staff keep improving without burdening them with detailed accounting. Above the threshold, increase the rigor. Above a higher threshold (often $10,000 or more), get Finance involved in validating the numbers. Finance won't audit a $47 improvement, but they will audit a $47,000 improvement, and their validation is what makes the resulting numbers defensible.
What is "funny money" in a CI context, and why is it dangerous? Funny money is the pattern where CI projects claim large savings -- $500K per project, $1M per project -- that add up on paper to transformative numbers, but the organization remains no more profitable than it was a year before. The savings were calculated in spreadsheets and never validated against actual financial outcomes. Once Finance and the C-suite figure out the claims aren't real, the program loses credibility permanently. The remedy is to err on the side of conservative claims, validate large savings with Finance, and let the program build trust by overdelivering on modest projections rather than underdelivering on aggressive ones.
Should safety improvements be justified on financial grounds? The strongest case is the moral one: nobody should get hurt coming to work, and patients shouldn't be harmed by preventable errors. The financial case is real -- reduced malpractice insurance, fewer reimbursement penalties, lower turnover from injured staff -- but leading with the financial argument tends to weaken engagement. Safety improvements are win-win-win: morally right, more engaging for staff than cost-cutting initiatives, and financially beneficial as a downstream effect. Lead with the mission. Let the financial benefits emerge.
How does continuous improvement increase revenue if employees aren't directly working on revenue? Revenue gains usually come as a second-order effect of operational improvements. A nurse who notices that prescriptions should be called in to the hospital pharmacy rather than handed to patients on paper isn't thinking about pharmacy revenue. The operational change happens to produce $200,000 per clinic per year in pharmacy revenue as a consequence. Reduced wait times in an ER increase capacity, which means fewer ambulance diversions and fewer patients leaving without being seen, both of which affect revenue. The framing for staff should be on operational improvement and patient experience. The revenue follows.
What's the right way to talk about CI impact with senior leadership? Four operating points: come with numbers (use platform benchmarks if you don't have your own yet), articulate them simply (lead with the benchmark, save the detail for the follow-up question), aggregate across all the improvement work happening in the organization rather than reporting on projects in isolation, and -- most important -- tie the conversation to the strategic priorities leadership is already focused on. Continuous improvement is versatile enough to point at any priority, but it has to be pointed at the priority the executive cares about, not the one easiest to explain.
Why does engaging more people matter more than running bigger projects? Because the data shows the financial impact of a CI program scales with engagement breadth, not with project ambition. An organization with 1,000 staff broadly engaged in continuous improvement produces roughly $5 million in annual impact at the conservative $5,000-per-person benchmark. The same organization running a dozen ambitious projects with 20-person teams each produces dramatically less, because most of the workforce never participates. Engagement is the variable that matters. Project sophistication is downstream of it.
How conservative is the $5,000 per person benchmark? Quite conservative. The arithmetic across platform data at the time of the webinar produced about $7,000 per improvement, and many improvements impact the organization in ways that don't get formally documented at all. The $5,000 figure is deliberately rounded down to leave room for variance and to allow CI leaders to overdeliver on their projections rather than underdeliver. The pattern is intentional: underclaim, overdeliver, build trust year over year. The opposite pattern -- aggressive claims that don't materialize -- is what kills CI programs over time.
Should ROI be tracked at the individual improvement level or at the program level? Both, with different rigor. Individual improvements should have impact data captured at the moment of completion, because attempting to reconstruct it later loses most of the signal. Program-level reporting aggregates across all the individual improvements, which is where the numbers become large enough to matter for executive conversations. Without individual-level tracking, the program-level numbers are estimates. With individual-level tracking, they're defensible.
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